The JobKeeper legislation has now been enacted.
The legislation, explanation notes, and Fact Sheets have been updated on the ATO & the Treasury websites. See links to these at the bottom of this article
Please note that this document is especially to inform small & medium not-for-profit organisations and particularly Australian Churches. The information we provide may be helpful for businesses, but it is not created for business advice. We recommend that businesses receive advice from their BAS Agents or Tax Accountants.
We have reviewed the legislation, the accompanying Explanatory statement and ATO Factsheets especially in relation to Employer Edibility and the processes for NFP organisations and found the following information that we believe you will find helpful. It provides clarification of many of your questions, as people have inquired of us so far, and our own questions.
- Eligible employers can enrol for the JobKeeper payment on the ATO Business Portal, Online Services for Agents or Online service for Individuals from Monday 20 April
- Employers/JobKeeper recipients will need to login to one of the portals once a month and confirm their eligibility. Agents will be able to do this on behalf of clients.
- The JobKeeper payment period commenced from Monday 30 March 2020 and will apply for 13 full fortnights until Sunday 27 September 2020
- The ATO will reimburse participating employers monthly in arrears $1500 for each full fortnight per eligible employee paid by the employer
- Eligible employers must pay their employees at least $1500, before tax, per fortnight for paydays on or after 30 March
- Employers must confirm eligible employees have been paid each month to trigger the ATO reimbursement process and provide some other supporting information (probably by STP)
Note: we are creating another blog to explain the employee edibility and related payroll processes.
Xero will make the process a whole lot easier.
Xero is updating its software. This will be available very soon.
“Xero Payroll will offer you a head start in identifying staff who may be eligible for the wage subsidy. It will compare the government’s eligibility criteria and data in Xero Payroll to suggest a list of employees.
You’ll be able to modify this list by updating your employee records.
By identifying who’s eligible, you’ll help the ATO prepare to issue payments. And you’ll be able to choose when JobKeeper payments should start and end for each employee.
Xero Payroll will soon help you process JobKeeper payments you’ve made to workers, including those made before JobKeeper was passed by Parliament. The software will create a pay item so that you can accurately report these payments to the ATO. You’ll just need to add the item to your employee’s payslip.
Xero will provide a way to process the JobKeeper payment and report it to the ATO. Most of this will happen seamlessly in the background while you’re filing STP.”
Click here for information from the Xero blog
What to do now
- If you haven’t already done so, please register your interest per the link below. This is solely to receive updates regarding the payment. It is not the registration for the actual payment. NB The ATO is asking each NFP/church employer, if they think they may meet the 15% income reduction criteria, to register their interest here –https://www.ato.gov.au/general/gen/JobKeeper-payment/.
- Be sure you are registered for, and are using, STP. Recording JobKeeper payments via STP will do more than help you get paid faster. It will ensure your record keeping is clear and well-documented for peace of mind in the months and years to come.
- Determine if your organisation is eligible for JobKeeper payments
- If you determine that your organisation is eligible, the next step is to determine the eligible employees. Please see our next blog for this information and the links and factsheets below.
- If you need to process JobKeeper payroll payments now – click here for the Xero support page on how to do this now, before the Xero software update is completed.
- If you need to process an employee stand down – click here for the Xero support page on how to do this.
Determine if your organisation is eligible
Charities registered with the Australian Charities and Not-for-profits Commission (ACNC), will be eligible for the subsidy if they estimate their GST turnover has fallen or will likely fall by 15 per cent or more relative to a comparable period
Decline in turnover test – summary points
- The decline in turnover test needs to be satisfied before an entity becomes eligible for the JobKeeper payment.
- Once this occurs there is no requirement to retest in later months.
- If an entity does not qualify for the month of April 2020 because its turnover has not been sufficiently affected, it can test in later months to determine if the test is met. This allows entities that only become affected part way through the six-month period of operation of the JobKeeper scheme to continue to monitor for any decline in turnover until they qualify for the scheme in a later period.
- The Rules specify two ways in which a business can satisfy the decline in turnover test: the basic test and the alternative test.
Decline in turnover test in summary – From the Information for employers Factsheet
To establish that a business or not-for-profit has, or is likely to, face the relevant fall in their turnover, most would be expected to establish that their turnover has or will likely fall in the relevant month or quarter (depending on their Business Activity Statement reporting period) relative to their turnover in a corresponding period a year earlier. Turnover is calculated as it is for GST purposes, and is reported on Business Activity Statements. It includes all taxable supplies and all GST free supplies but not input taxed supplies. For registered charities, they may also include donations they have received or are likely to receive in their turnover for the purpose of determining if they have been adversely affected.
Decline in turnover test – the detail
There are 2 tests:
1. Basic Test
The basic decline in turnover test works by comparing the projected GST turnover of the entity for a period (during the turnover test period) with the equivalent turnover for a relevant comparison period (the comparison turnover). In effect this compares a month or quarter in the period the JobKeeper scheme applies with the corresponding period in 2019
The shortfall, expressed as a percentage of the comparison turnover, equals or exceeds 15%
2. Alternative Test
The Commissioner may, by legislative instrument, determine that an alternative decline in turnover test, depending on classes of entities. This is not clear at this stage – and will take time – so best to try to avoid, if possible.
The turnover test period:
- For monthly BAS lodgers (which 99% of our clients are not) a calendar month that can be used are March 2020 – September 2020; or
- For quarterly BAS lodgers – a quarter that starts on 1 April 2020 or 1 July 2020
Relevant comparison period
Must be the period in 2019 that corresponds to the turnover test period. Eg March 2020 & March 2019
Cash or Accrual
We have not seen any specific explanation about whether we calculate these 2020 estimates on a cash or accrual basis. Therefore, we recommend that this information be calculated the same as your BAS calculation method – Cash or Accrual. Once again, the vast majority of our clients GST Calculation method is Cash.
Common Church & NFP Income Items to be included in the GST Turnover
- Commercial Rent
- Hall/Church usage
- Income from Activities or Events
- Sale of Assets (with some exclusions eg residential properties)
- Insurance Claims
- Income from Weddings & Funerals
Common Church & NFP Income Items to be excluded in the GST Turnover
- Residential Rent
- Interest, dividend Income
- Income from GST Grouped entities – eg Sydney Diocese churches, UCA NSW churches,
- Gains/Loss on Sale of Assets
FAQS, Some helpful statements from the ATO’s FAQ’s
WHAT IS THE DEFINITION OF TURNOVER?
Turnover (for purpose of determining how much turnover has declined by) will be defined according to the current calculation for GST purposes and is reported on Business Activity Statements. It includes:
- all taxable supplies and
- all GST free supplies
- but does not include input taxed supplies.
Registered charities, may also include donations or gifts they have received or are likely to receive in their turnover for the purpose of determining if they have been adversely affected.
OUR TURNOVER HAS NOT DECREASED BY 15/30 PER CENT THIS MONTH, BUT WE BELIEVE IT WILL IN THE COMING MONTH. ARE WE ELIGIBLE?
You can apply for the payment if you reasonably expect that your GST turnover will fall by 15/30 per cent or more relative to your GST turnover in a corresponding period a year earlier. The ATO will provide guidance about self-assessment of actual and anticipated falls in turnover.
IT IS UNLIKELY THAT OUR TURNOVER WILL DECREASE BY 15/30 PER CENT IN THE COMING MONTH, BUT CAN WE APPLY LATER IF OUR TURNOVER DECREASES IN ONE OF THE SUBSEQUENT MONTHS?
If a Church/NFP does not meet the turnover test as at 30 March 2020, the business can start receiving the JobKeeper Payment at a later time once the turnover test has been met. In this case, the JobKeeper Payment is not backdated to the commencement of the scheme. Churches/NFPs can receive the JobKeeper Payments up to 27 September 2020.
ARE WE REQUIRED TO PAY PAYGW AND SUPERANNUATION ON THE JOBKEEPER PAYMENT?
Churches/NFPs must pay a minimum of $1,500 per fortnight to your eligible employees, withholding income tax as appropriate. The $1,500 per fortnight per employee is a before tax amount. Where an employee is paid more than $1,500 per fortnight, the employer’s superannuation obligations will not change. Where an employee is having their wages topped up to $1,500 per fortnight by the JobKeeper Payment, it will be up to the employer if they want to pay superannuation on any additional wages paid by the JobKeeper Payment
From JobKeeper Payment – Protecting Integrity Fact Sheet
Robust eligibility rules to stop double payment
- An individual can only benefit from one JobKeeper Payment per fortnight.
- An individual must agree to be nominated as an eligible employee to receive the JobKeeper Payment by that particular employer and confirm that he or she has not agreed to be nominated by any other employer. ….
- Making a false statement results in an individual becoming ineligible. Any resulting overpayment may be recovered directly from the individual. Making a false statement also renders the individual liable for criminal and administrative penalties. The ATO will undertake compliance activities designed to identify multiple payments to individuals, including by utilising existing reporting such as STP reporting.
To receive the JobKeeper Payment, employers must:
- Apply at ato.gov.au and assess that they have or will likely experience the required turnover decline.
- Provide information to the ATO on all eligible employees. This includes information on the eligible employees engaged as at 1 March 2020 and those currently employed by the business or not-for-profit (including those stood down or re-hired). For most businesses or not-for-profits, the ATO will use Single Touch Payroll data to pre-populate the employee details for the business or not-for-profit.
- Ensure that each eligible employee receives at least $1,500 per fortnight (before tax). Employees who receive $1,500 per fortnight or more from their employer will continue to receive their regular income according to their prevailing workplace arrangements. For employees that have been receiving less than this amount, the employer will now need to pay them, at a minimum, $1,500 per fortnight before tax.
- Notify all eligible employees that they are receiving the JobKeeper Payment.
- Continue to provide information to the ATO on a monthly basis, including the number of eligible employees employed by the business.
Legislation, the accompanying Explanatory statement and ATO Factsheets:
Legislation – https://bit.ly/JKFedGovtRule090420
Explanatory Statement – https://bit.ly/JKEM090420
Employer Fact Sheet – https://bit.ly/JKEmployers090420
Employee Fact Sheet – https://bit.ly/JKEmployees090420
FAQ – https://bit.ly/JKFAQ
Integrity Fact Sheet – https://bit.ly/JKIntegrityFactSheet
General Fact Sheet – https://bit.ly/JKGenFactSheet
From Treasury – https://treasury.gov.au/coronavirus/jobkeeper
Benkorp is working hard to help small & medium not-for-profit organisations and particularly Australian Churches during this difficult time. Our aim to inform you about these great government benefits as clearly and as practically as we can. Please note that this information has only just been legislated and is changing and is still being clarified as we write and therefore subject to change. We are doing our best to keep up to date and keep you informed as quickly as possible.